$8M Revenue Shortfall Blamed on Bad DB Entry 220
SierraPete writes "Yahoo! News reports that an improper database entry, most likely caused by an external user, has created an $8 Million USD revenue shortfall for a northwestern Indiana county because a house that was supposed to be valued at $121,000 showed a value in the database at $800,000,000. There's no specific suggestion that this erroneous entry was done maliciously, but it is leading to big problems in the local governments as they try to figure out how to drop that much money out of their respective budgets. As an aside, how would you like to be in the homeowner's shoes when he opens up his mail box and finds an $8M property tax bill? I'm sure there was a trip to the emergency room or the dry cleaners involved."
400 not 800 (Score:5, Informative)
Did anyone actually bother to rtfa, or is it just cool to make up numbers for post summaries now?
"A house erroneously valued at $400 million"
"The house had been valued at $121,900 before the glitch."
Re:Tax Rate? (Score:3, Informative)
Re:Tax Rate? (Score:2, Informative)
Re:They didn't notice (Score:3, Informative)
Local tax districts set a budget based on some assumptions about the tax base (the amount of taxable real property). After the budget is approved, bureaucrats in the taxation department compute the actual rate by dividing the budgeted revenue / taxable base. Generally there's a legal limit on the rate, but the actual rate that is charged is based on that computation and somewhat lower.
So your property tax rate isn't static (like sales tax, for instance), but rather dynamic from year to year.
In this scenario, the governing board sets a budget based on an assumption of base B.
But when the bills are generated, they're computed on a base of roughly B + 400 million.
As a result, everybody else in the county is just slightly underbilled
Re:They didn't notice (Score:3, Informative)
I chose to reply.
I don't know what state you're from, and things may work that way there, but in Michigan, local taxes do NOT work that way.
There's an important thing to be said, and that's that alot of states do their taxes differently. Local municipal growth and municipal management was something that was allowed to grow organically. Townships and county's right next to each otehr don't even do the same calculations or use the same methods, sometimes.
In Michigan, there are certain state rules that every municipality follows (like when tax collection ends, for instance) but some municipalities just disregard the established rules. There's atleast one county in Michigan that computes interest completely wrong.
anyway, the point of this post is to say that there is no uniform method, code or law that dictates how local taxes are calculated. that may be the way they are there, but not here or other places necessarily.
Re:Stop Blaming the Database! (Score:3, Informative)
Yeah, why do people always blame the database? I get the "it's the database" accusation all the time from Duhvelopers.
A friend of mine was suffering iron toxicity because he took too many iron supplements. He went to the doc to find out what was wrong and went through a battery of tests. A week later he got the report in the mail saying that he had liver cancer. He had a week before his next appointment and started reading up on liver cancer only to find out that it's almost always fatal and it involves a long drawn out time of excruciating suffering before the ultimate demise. So for a week he lived with that knowledge until he went to the doc only to find out that it was a data entry error. It turns out that the code behind the checkbox for liver cancer defaulted to the affirmative and the data entry person had just clicked submit after they complete a separate section of the form. So what programmer bozo would default such a data entry field to yes? Was he/she not thinking or was it sadistic humor?
Re:The homeowner (Score:3, Informative)
property tax system (Score:3, Informative)
In my state, larger properties are almost always exempted from taxes anyway. That leaves the upper middle class paying the bulk. After all, the poor don't own valuable property and the rich manage their ag exemptions by hiring professional exemption maintainers. If you don't want to play the game you're gonna get screwed, just like dealing with the IRS.
Interesting thing, if the victim of this mistake wasn't watching what was going on, he could have been in a world of hurt. Where I live, there's a relatively short window of time to dispute a valuation. After that you're in real trouble.
People need to realize that a consumption tax is the way to go. Infrastructure for that largely exists already and cheating is hard to do. Wealthier people consume more so therefore pay more and there's a builtin incentive to save. The fewer hidden taxes we have the better since it gives us better visibility to how much we really pay.
Well I'm not surprised... (Score:2, Informative)
Re:Mod Parent Down (Score:3, Informative)
What could happen is to say that at your tax rate, the locality is able to collect $50 million, but only needs $30 million. They would have to adjust all of their taxes to only collect the $30 million, so nobody would pay the 100% rate based on their assessment. However, if they collected $30 million last year, but need $38 million this year, they may need to perform a special procedure to raise their tax revenue by the $8 million over the previous. In both cases, the maximum possible tax revenue would be $50 million, they levied a tax for that amount internally, and had to do a calculation to drop that to only the exact amount required.
So you see, you have a maximum possible tax, but would like not pay that full rate.
The entire state of MA does it this way, for example. I would be very surprised if most of the US didn't do it in a similar fashion.
Re:If it were my house... (Score:3, Informative)
You are completely wrong. In my opinion, to understand why seventeen fairies consoled all their kitchen troubles in a yellow rock covered in a stylish freedom fighters dead skin with the phrase 'limbo chocolates for all' engraved in it.
Therefore: vibrating Norwegian horse box full of sea-cucumbers.
For further insight, send an email with the subject 'subscribe' to: burning1@usdachoice.us
*grin*